Private Equity Eyes Fundraising Boost With #Kuwait Fund’s Return - Bloomberg

Private Equity Eyes Fundraising Boost With Kuwait Fund’s Return - Bloomberg

Kuwait’s pension fund is restarting private equity allocations after a hiatus, according to people familiar with the matter, potentially unleashing billions of dollars in fresh capital for an industry grappling with a fundraising slump.

The Public Institution for Social Security is in discussions with multiple leading buyout firms about resuming deployments, the people said, declining to be identified discussing private information.

PIFSS has been largely absent from private markets since October 2022, when senior executives — brought in to overhaul the state institution after its former head was found guilty of personally profiting from it — were asked to resign.

At the time, the fund managed about $137 billion and ranked among Kuwait’s largest allocators. The shake-up left it without an investment committee, limiting activity to routine tasks.

The pension fund’s return to private markets is part of an effort to enhance revenue streams and boost returns, the people said. The new commitments may come with strict limits on how much can be deployed to each buyout fund, one person said.

Representatives for PIFSS declined to comment.

PIFSS is dipping back into private equity at a delicate moment for the industry, which is contending with sharply lower fundraising as firms struggle to return capital to investors. Despite a pickup in global dealmaking, private equity exits remain sluggish, pushing investors to rely more on secondary markets to offload holdings.

In May, the head of the $1 trillion Kuwait Investment Authority warned the industry was “very troubled,” citing practices such as continuation vehicles that can delay cash distributions to limited partners.

The KIA is among the largest wealth funds in the world, and the second-biggest in the cash-rich Middle East. The top six regional wealth funds oversee assets of about $4 trillion, and many of them have historically been significant backers of private equity firms.

A more active PIFSS would also support Kuwait’s broader push to attract global financial firms and strengthen its position as a regional business hub.

Carlyle Group Inc. is planning to open an office in Kuwait, Bloomberg News has reported, and co-founder David Rubenstein was among the titans of the industry who were in the region this month. Franklin Templeton and State Street Corp. are considering similar moves.

They would add to a small but growing roster. BlackRock Inc. opened a Kuwait office earlier this year, and Goldman Sachs Group Inc. has announced plans to follow.

Goldman is also jockeying for a potential $10 billion mandate from Kuwait’s sovereign wealth fund, Bloomberg News reported. Chief Executive Officer David Solomon recently said Kuwait’s ruler is “taking action to really spur significant investment, significant growth.”